On Tuesday afternoon, Yeovil Town Chairman John Fry wrote to the Glovers Trust replying to a letter they had sent to the club in early April concerning the club's ownership, assets and debts. The spark was a legal charge the club had agreed to put on the Huish Park stadium and surrounding land, that was lodged with Companies House in October 2016, but without any announcement or explanation from the club.

I've blogged about this before, so if you're not aware of the background, then the February 2017 article Keeping Control Of The Land may help you catch up on what is going on. The Trust sent a letter to the club on April 4th, with John Fry's reply coming in on April 25th. You can read both in full and make up your own mind as to whether the Trust's letter was reasonable, and whether they've got the answers that they should get.

Leaving aside a bit of a side-swipe from Mr Fry, which was aimed at the Trust (I'll move on to that at the end) and a few other issues, the main thing I wanted to see is how well the Trust's questions were answered. Unfortunately the response from John Fry doesn't make that a straight-forward task, as any answers are embedded inside his letter, rather than as an easy-to-match Q&A response. But I'll try to be as fair as I can in pulling out what I think is Mr Fry's response.

Question 1: Please can you advise us how the assets owned by Yeovil Town Holdings Ltd and Yeovil Football and Athletic Club Ltd are split, so it is clear which company owns which asset?

JF: No answer.

Verdict: Failed to answer the question. The nearest thing we have to an answer in this area is in Question 2, but that does not address which company owns which assets. That is important to know if either company is bought or sold, or if either has an insolvency event, or an event that would trigger clauses in the Legal Charge(s). But it's not been answered.

Question 2: Does the ownership of any of the 26 acres lie outside these two companies? If so please specify the ownership and the split.

JF: "None of the 26-acre site is in the ownership of any party other than YTH and YTFC."

Verdict: Answered in full. This tells us that in terms of the club's retail development plans, nothing has moved outside the YTFC Group ownership yet. But as Question 1 shows, we still don't know the split.

Question 3: The Western Gazette recently stated that the football club owed no money to Norman Hayward, however we believe that there is still an outstanding legal charge of £278,000 created on 24th March 2011 – can you confirm that this is the case?Question 4: Can you also confirm that there is also a separate unsecured loan from Norman Hayward making a total of £427,000 being owed?

JF: "YTH does owe Mr. Hayward the figure mentioned of £427,000, which is secured by a Legal Charge between YTH and Mr. Hayward. This figure includes the £278,000 originally secured."

Verdict: Answered in full. However, Mr Fry's answer gives us some bonus information. He indicates that the entire debt of £427,000 is now secured via a Legal Charge - something that is yet to be visible via Companies House. Previous information was that only the £278,000 had been secured against the land assets at Huish Park, so this is a change to previous information, and further strengthens Norman Hayward's hold on Huish Park.

Question 5: Were all the Directors of Yeovil Town Football Club present on the occasion when a decision was made to accept a Land Charge made out in the name of Mr Norman Hayward?Question 6: How many Directors were in agreement with this action?

JF: "Board meetings of both YTH and YTFC are held regularly and conducted in accordance with best principles of corporate governance, Company Law and EFL Rules and Regulations (as appropriate). Companies Act provisions relating to conflicts of interest are observed at all times, and we can assure you that there has not been any disagreement in either Board, or any dissent, at decisions which have been properly taken."

Verdict: None of these two questions have been answered. It is still not clear how many Directors were party to this decision, and whether they all voted for this action. The response does state that there has not been any 'disagreement' or 'dissent' but it would be less ambiguous if it was clear that all Board members knew the Legal Charge had been undertaken, and that all of them voted for it.

Question 7: Why have the seven directors of this limited company allowed one director (Norman Hayward) so much control?

JF: "The Legal Charge over the Stadium Land was put in place to secure a proposed loan from Mr. Hayward to YTFC of additional working capital which, to date, has not been required so, effectively, its provisions are not operative"

Verdict: Partially answered. Mr Fry's answer indicates that the "proposed loan ... has not been required". This is now six months on from the registration of the Legal Charge, so does not explain why the Directors authorised the creation of that Charge for an event that has never materialised? Why not wait until it becomes actually necessary?

Question 8: What are the consequences to the Football Club should the Club default on the terms of the Land Charge?

JF: No answer.

Verdict: John Fry could argue that as the loan has not been required that there is no risk of default, but if the intent is for the Legal Charge to act as a mechanism for Norman Hayward to lend money to the club in a manner that is automatically secured, it should still be possible to disclose what would happen if the club defaulted on that, given the legal document has already been signed.

Question 9: Will Mr Norman Hayward have the equivalent of a covenant against the Club?

JF: No answer.

Verdict: This isn't touched on at all. However, my personal view is that given the creation of the Legal Charge involved an amendment to the Land Deeds at Huish Park, the answer is almost certainly 'Yes'.

Question 10: What provisions are in place in the event of Norman Hayward’s bereavement or incapacity to act as the legal charge holder?

JF: "Succession planning has been carefully considered but must remain confidential."

Verdict: Not answered. That is an answer to a very different question. What would happen to Norman Hayward's shares in Yeovil Town Football Club (and other companies) would be handled by that Company's articles of association - i.e. their consitution. However, the small print in the Legal Charge indicates that in the event of Mr Hayward's death (or his incapacity to act for his own affairs) then any value associated with that Legal Charge and the control of its clauses, would be handled by his Estate. The Directors of Yeovil Town Football Club cannot control 'succession' in this instance - it would come down to whoever Mr Hayward has named in his Will, which he can change at any time, without consultation with any YTFC Directors, and does not have to disclose it to them.

Question 11: What costs are involved in removing this charge as you have stated no money is owed?

JF: "It could be discharged at any time, at minimal cost, should the envisaged loan not be required"

Verdict: Not really answered. What may be regarded as 'minimal cost' is fairly subjective. I suspect Mr Fry is referring to Solicitors fees, Land Registry fees and Company House fees that may be incurred to discharge the Legal Charge. Presumably similar provisions had to be spent to create the Legal Charge. But this takes us back to Question 7 - why spend money on something - even if only at 'minimal cost' - if six months down the line, the club are still not sure whether they need it or not?

Question 12: Given the clear conflict of interest between Norman Hayward, the Yeovil Town Football Club director and Norman Hayward, the Legal charge/Land covenant holder, when the Board took the decision to grant him the legal charge were all the requirements of the Companies Act 2006 complied within terms of declarations of interest and voting as it would appear to be the case that Norman Hayward would not be able to vote on this matter?

JF: "Companies Act provisions relating to conflicts of interest are observed at all times"

Verdict: Not really answered. The response is a generic one that could have been made much more explicit by stating whether Norman Hayward had withdrawn from voting when the remaining Directors of Yeovil Town Football Club approved the creation of the Legal Charge.

Question 13: It would also appear that the accounts for both Limited Companies are now overdue and thus incurring a fine. At a time when money is extremely tight can you explain why this situation has occurred?

JF: No answer.

Verdict: After the Glovers Trust letter was sent, the Football Club did file it's Company accounts. However, they should have been lodged by March 31st 2017, and so were a few days late. We dont know if the club have needed to pay a fine. However, given the Trust's main focus is upon the Legal Charge, this issue has expired.

OTHER MATTERS:

John Fry's letter raises a number of side issues. Taking each one in the order that they appear in the letter, he claims that the Glovers Trust have "chosen to create misconceptions which may be harmful to the well being of the Football Club and its loyal supporters". To my eyes, that is a ridiculous accusation to make against supporters of the football club. The Trust have asked for answers to a number of basic questions (as above). They've not created 'misconceptions' - if anything they've given the club an opportunity for them to clear any misconceptions up. Surely it is better for the Football Club to have clear on-the-record answers to questions supporters may have about the running of the club, than to have those questions unanswered, and therefore subject to rumour and supposition?

The Club and its Chairman and Directors 'create misconceptions which may be harmful to the well being of the Football Club' when they fail to communicate effectively with their own supporter base. Supporters or Supporter Groups should not be criticised for raising questions about the running of their club. If John Fry doesn't want 'misconceptions' then he needs to resolve the fact that over the last ten years, the club's boardroom level communication hasn't been good enough. That's not the fault of the supporters.

To show how 'misconceptions' can occur, when the club do not communicate effectively, it's worth noting why the Glovers Trust fielded Questions 3 and 4. On February 23rd 2017, the Western Gazette's online section headlined with "Yeovil Town owes no money to Norman Hayward as co-owner given control of future of Huish Park". The misconception here lay in the fact that the Gazette mistakenly concluded that as the core Yeovil Football and Athletic Company Ltd (aka Yeovil Town Football Club) owed no money to Norman Hayward that it meant no money was owed at all. Unfortunately, the club's complicated Group company structure means that it's now essential to look at all of the companies in the group to determine an accurate position. The answer to Questions 3 and 4 confirm that £427,000 is owed to Mr Hayward, through Yeovil Town Holdings Limited.

Frustratingly, the Gazette's headline for their Tuesday 25th April article repeats the same error, saying "Yeovil Town's Huish Park stadium is 'not security for anything' says chairman John Fry". The Companies House document that holds the March 2011 Legal Charge of £278,000 (revised up to £427,000 by Mr Fry in his letter) secured by Norman Hayward makes clear that the charge is secured against "All that freehold land comprising part of Yeovil Football and Athletic Club, Huish Park, Yeovil". Mr Fry's letter to the Glovers Trust discloses this as well, stating "Yeovil Town Holdings does owe Mr. Hayward the figure mentioned of £427,000, which is secured by a Legal Charge". So it is inaccurate to suggest that the Huish Park Stadium is not being used as security - it is just that the governance of that is held by the Holdings company, rather than in the core YTFC company.

Why the Gazette have overlooked this, is because they have taken Fry's quote of "the stadium is not security for anything" in isolation, not realising that he is being specific to the core YTFC company, and not the football club as a whole. I admit this is a complex topic, but this is precisely why the club need to nail down their communications properly in this area. The information was in Mr Fry's letter in this instance, but you had to read it very slowly to realise that when he referred to "YTFC" he was referring to a specific company within the 'Group' structure, and not the YTFC that most of us would see as the football club as a whole.

Finally, the letter says to the Glovers Trust: "We would again urge you to become a member of the new Supporters Alliance, created to bring all official supporter groups closer together". At present, the Trust have stated that they cannot join the newly constitutedAchieve by Unity Supporters Consortium and have instead been meeting with the Club on a bilateral basis. The reasons for this are known by the Club and handily enough Mr Fry gives the reason why - he describes it as a pool of "all official supporter groups". The constitution of the Glovers Trust is that it is an independent organisation that is run under the framework of a Community Benefit Society - the model that Supporters Direct recommend.

When the club announced plans to set up an 'alliance' of supporter groups in October 2016 they made clear that those organisations that wished to attend the Alliance would be recognised as "the official supporter organisations of YTFC" and that each Group would have to undergo an affiliation process and a 'set of rules' for those affiliated groups to follow. An Independent Supporters Trust would break its own constitution if it tied itself to the club in that way, and so the Glovers Trust Directors rightly declined the offer.

The minutes of the last meeting the Trust held with the club indicated that the Club were going to look into the way that they had set up their Alliance group to see if it was possible to include independent supporter organisations. The concept of the 'Alliance Group' stems from a Football League directive requiring all member clubs to meet supporters groups at least twice a year. The source of this was a national Government report in January 2016, which said "the Leagues will recommend that this representative group of supporters includes the club's Supporters Trust. The Leagues will advise clubs that no individuals should be excluded from the meetings without good reason" - Supporters Direct (the umbrella body for Supporters Trusts) had been part of the Government's Expert Working Group, so it's hard to believe that the intention was to only allow 'official' organisations. The starting point should therefore be for Yeovil Town to determine why it chose to go down that path, when the Government committee wanted all fans groups to be included.

Classic JF! Smokescreen and accusations to divert focus away from him and his cronies. Is it any wonder vast numbers of supporters have walked away from the club.
26/04/2017 11:37:23

Mark Budden said ...

I am glad there are people around who understand all this sort of thing... I try but am usually unsuccessful. Thanks to all who are involved in the running of our great club behind the scenes... It's all I can do to keep abreast of tactics and results on the pitch!
26/04/2017 12:30:32

Barrie David said ...

I feel sorry for David Mills, is he the conduit for a more approachable dialogue with the directors, or another barrier that the Glovers Trust and other concerned supporters need to get through before answers are obtained?

This is a good start by the trust and exactly the type of questions that need to be asked.

There are many more, starting with:
Why the lack of progress since the splitting of YTFC and YTFC Holdings?
Which expert does not understanding Planning legislation that the same mistakes seem to be made time and again ?
Is David Mills able to bring in any more Directors that are possibly still of working age and understand how a modern company should work ?
26/04/2017 13:44:59

Hantsgreen said ...

Agree with Mark - this is a very specialist field of knowledge in company law etc. It is very helpful and reassuring that we have supporters who are able to ask the awkward questions when they really should not need to be asked if things were more transparent! As I sit here trying to make the difficult decision regards renewal of next years season ticket I am very happy for others to do the specialist difficult work. Please keep up the good work.
26/04/2017 14:12:39

Green Commuter said ...

Barrie David - I know what you're saying but the truth is that JF and NH know exactly how a modern day football club works.....you create a tangled corporate structure, with inter-company loans and shareholdings - make sure that you have the tangible assets away from the operational side of the business....allow the operation to fail and then let the insolvency legislation follow due process. It's obvious what's going on - and in Scooby language....damn those pesky Trust members for asking such awkward questions.

If I remember rightly the Director/Company secretary that sadly died in the early 2000s had put in place various safeguards to combat such attempts to 'be creative' with the club's assets - but if my memory serves me right this was 'undone' a few years back so that the club could be more attractive to investors(!)

I can see this only ending in one outcome - the JF/NH 5 year plan appears to be to drive the club out of the football league and into obscurity

The match day experience for the last couple of years has been poor - I shall not be renewing my season ticket of some 25 years
26/04/2017 16:51:00

SheFellOver said ...

Er, the issue about Directors and conflicts of interest is a simple one. According to Companies House, Yeovil Town Holdings only has 2 Directors and a Secretary. Norman Hayward steps out the room, John Fry votes through a charge and Michael Wakeham makes a note of it!
26/04/2017 17:22:27

dave b said ...

Hantsgreen, I am not sure Mark Budden is praising The Trust. I believe he is praising The Board for the way they manage this complicated scenario.
26/04/2017 17:39:05

Alan Wilkinson said ...

Thank you for your clarification of such a difficult subject for the layman. Frys response to the Trusts more than reasonable questions are in my view pathetic and his attempt to paint the Trust as being troublemakers are despicable. I am in the process of deciding wether or not to renew my season ticket and this response of his does nothing to persuade me in a positive way.

26/04/2017 17:52:21

HHH said ...

The whole tone of JF's response is what we've come to expect. All questions are treated as a personal slight: 'how dare anyone impugn I do not have the best interests of the club at heart'. As he can't get past that, even when no such impugnation is intended, replies are always focused on huffy defensiveness and obscurantism, not on constructively trying to clarify and explain what is being done, why it is being done, and how it fits into broader plans for progressing the future of the club. So the gap between Fry, the Board and many supporters merely widens further.
26/04/2017 21:18:21

Stephen D'Albiac said ...

To address the point regarding the Western Gazette article from February, the story always made clear that there was a £427,000 debt owed to Norman Hayward. There was an error in the editing phase that resulted in the story’s featured headline containing an inaccuracy, but this was put right – and the original mistake acknowledged – as soon as it was brought to my attention. In any case, the story itself always made clear that the “no money owed” line related specifically to the legal charge and not the club as a whole.
Stephen D'Albiac, sports writer, Western Gazette/Somerset Live
26/04/2017 22:16:57

Cruncher said ...

Green Commuter: I feel you are referring to information disclosed many years after the death of George Smith about SSDC holding a covenant arranged when the club moved to Houndstone restricting land use to protect the club's assets. If this has been overridden as you suggest then I have either forgotten or missed it - perhaps Badger could kindly enlighten. I certainly recall SSDC announcing it was compromised being both decision-maker on development proposals and appointed safeguarders of club land.

My general observation is that the key thing to note is that after years of club evasiveness and worrying behaviour, the inevitable formation of a Trust to challenge club about the land-split has given the club the chance to properly answer correct scrutiny and relative to the seriousness of long-standing concerns it has not at all provided an adequate response.
26/04/2017 23:36:55

andrew strickland said ...

I try to be positive but to me there remains only one positive outcome and that is that John Fry leaves our dear club entirely. As every one of his statements simply compounds the vast, and growing separation he has created between the fans and the club. If I was living locally my season ticket would have been stopped previously, but as I live 250 miles away, all I can do is continue to boycott local games. Sad after over 40 years of supporting the Town, but at least the Trust and platforms like Ciderspace enable an open and honest discourse to take place. An openness the Board could only dream about

27/04/2017 07:31:10

Will said ...

How very depressing this situation has become. We can't say that the warning signs haven't been there for a decade though. The death of this football club should come as a surprise to no one if it eventually comes to pass.

I'm particularly disappointed by the lack of actual journalism from the local press. To paraphrase Orwell journalism is about asking tough questions and printing things that they would prefer you didn't know about. The rest is public relations.
27/04/2017 09:02:37

TFS said ...

The above responses says it all.So I won't make a further contribution.
I have renewed my season ticket as I have a little faith left, I hope that the directors support the manager(who ever it is) With adequate funds to do the job. I do worry that this will not happen.
27/04/2017 17:15:54

Badger said ...

Green Commuter and Cruncher - yes that Covenant is the George Smith one. As I recall he put it on the Huish Park land to protect the land from sale/development from anything other than Sports and Leisure. The Club asked the Council to remove the Covenant (as Mr Smith put it in their name) as part of their 2012 Planning Application. SSDC replied saying that YTFC had put them in an awkward position given that the club was now asking them to be both the Planning Approvers and the party that would release/sell the Covenant. Hence they warned the club that this was a conflict of interest and that even if the Planning Committee approved the application they'd have to refer the application to a separate Regulatory Committee for it to be scrutinised. As the Planning Application failed, to my knowledge the Covenant still exists.
27/04/2017 20:46:45

supporter paul said ...

I am a small shareholder of YTFC but I have not seen a statement of accounts for several years. Not since Mr Fry stopped having AGM's
28/04/2017 22:09:39

Kevin Rogers said ...

I was always of the understanding that SSDC actually owned 4 acres of the 26 acre site and those 4 acres are leased to the club on a 99 year lease. Mr Fry communication with fans, not helped by weak journalism locally, effectively means he thinks he can put up any smoke and daggers to any `negative` question that may be asked of his running of the club. Good grief I am a minor shareholder in Yeovil Town Holdings, and have NEVER received any copy of YTH accounts, despite me writing to Mr Fry, if he will not answer a shareholder, what hope is there for any fans groups!! For the record two years ago I withdrew my support for Fry/Hayward regime,by not renewing my season ticket.
29/04/2017 22:05:56

andrew strickland said ...

Dear John Fry, After yet another scintillating season of amazing success, please can I ask you one thing, from your strategy for next year. Leave, as your leadership has wrecked everything surrounding the club.
30/04/2017 06:58:23

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